The past year hasn’t been an easy one for many Kiwi businesses and their employees.
We’ve been navigating a complex environment shaped by economic headwinds, weaker consumer demand, rising unemployment, and ongoing cost pressures.
The dynamics of the workplace are also undergoing significant changes, with shifting employee expectations around flexibility and well-being, and evolving organisational needs.
Here’s our review of the most important workplace trends that are shaping the employment landscape in Aotearoa.
Unemployment has risen to 4.3% in 2024, up from 4.0% at the end of 2023. This increase represents an additional 134,000 unemployed people, though the numbers don't account for public service workers recently made redundant.
The rise in unemployment has affected regions and communities unevenly, especially the Wellington region as well as the young, women, Māori, and Pasifika people. This indicates a widening inequality gap in the job market.
At the same time, wage growth is slowing. The latest labour cost index showed a 3.8% rise, which is the lowest increase since late 2022. This slower wage growth, combined with high inflation and cost-of-living pressures, has increased employee stress and dissatisfaction, leading many to feel stuck in roles that don’t offer enough financial or personal rewards.
MyHR’s data reflects the difficulties organisations have faced, with a 4.6% drop in overall hiring activity (11,871 new hires in 2024 vs 12,442 in 2023), a drop in new employees being offered permanent roles (61% of all new hires in 2024 compared to 67% of all new hires in 2023), and an increase in casual (22% vs 24%) and fixed-term hires (11% vs 15%).
The economic slowdown has led to a significant rise in restructures and redundancies across New Zealand.
Requests for assistance with restructures from MyHR clients have risen 60% since 2023 (more than doubling since 2022), and for the first time since the early days of the COVID-19 pandemic, these requests have outnumbered disciplinary actions, reflecting the tough business conditions.
While streamlining operations, consolidating roles, and reducing headcounts is often necessary for long-term business survival, they also contribute to uncertainty and job insecurity, which can damage productivity and employee engagement.
The challenge for employers is balancing cost-cutting measures with fostering an environment that talented people want to work in.
Another sign of the tough economic conditions is the elevated employee turnover rates New Zealand industries have been facing, with some sectors experiencing staggering levels of churn in the past year.
MyHR’s data shows businesses in the accommodation and food services sector have been particularly affected - employee data shows a turnover rate of over 72% - while the administrative and support services, information media and telecommunications, and utilities (electricity, gas, water and waste) industries have faced turnover rates close to 50%.
Official numbers from the Ministry of Business, Innovation, and Employment (MBIE) put the annual average turnover rate for New Zealand businesses at 30.4%, slightly lower than in the UK and the USA.
High turnover rates puts pressure on businesses to recruit and retain talent, often leading to increased recruitment costs and a loss in organisational knowledge. For some companies, managing employee churn has been one of the most pressing concerns of 2024.
Burnout continues to be a significant issue for New Zealand workers, with a recent survey from Massey University revealing that 57% of employees are at high risk of burnout in 2024 - double the rate from last year. This rise is mainly driven by job insecurity, with public service workers facing particularly high levels of stress.
Employees in the burnout risk category suffer poorer mental health and are more likely to disengage from work and contemplate quitting their jobs.
Prevention is proven to be better than a cure and we’ve seen employers that respond to these risks by investing in employee health and well-being can successfully mitigate the impact on productivity and employee retention.
Flexible work arrangements have become the norm for many workers in New Zealand. Statistics NZ found 81% of businesses offered flexible working hours last year, with 43% providing work-from-home options.
The number of people working in hybrid environments has risen sharply, with recent data indicating 41.7% of workers are now working in a hybrid setup - an increase from 28.4% last year.
This trend toward flexibility reflects a broader desire for better work-life balance, with studies showing a majority of workers are willing to trade higher salaries or other benefits for hybrid work and flexible hours.
While some companies in other countries, like the US and Australia, have pushed for mandatory office attendance, New Zealand businesses have been more open to accommodating remote and flexible working preferences. The payoff is higher levels of employee satisfaction and retention, and access to a wider talent pool.
From streamlining repetitive tasks to enhancing decision-making processes, artificial intelligence (AI) tools - including large language models like ChatGPT and automation - are playing a larger role in how NZ businesses operate.
A study by Microsoft found Kiwi workers are among the strongest adopters of generative AI in the workplace, with 84% using the technology at work (the global average is 75%). However, there is a lag in the official uptake of AI by businesses - Datacom reports 66% of NZ companies are now utilising some form of AI - and the majority of employees that use AI bring their own tools to work.
From our experience, smaller organisations can be slower to take up new technology than larger, well-resourced ones, but many companies are more excited than ever about the benefits of AI, and are focusing on employee training to ensure that workers can work alongside these tools, rather than reducing employee headcounts.
The trends of “silent firing” and “quiet quitting” have gained plenty of media attention this year, but we’re not totally convinced they are having much impact in the Kiwi workplace.
Silent firing - where employers indirectly push employees out through lack of support, limited career opportunities or unfriendly work environments - has become a more common way in some countries to manage underperformers or bad fits without facing the legal consequences of direct dismissal.
MyHR hasn’t seen much evidence of an increase of silent firing in New Zealand, mainly because employees have legal protection against constructive dismissal (which is by and large the same as silent firing), and we work closely with our clients to ensure any dismissal is transparent, justified, and fair.
Quiet quitting - where employees disengage from going above and beyond the basic requirements of their roles - is hard to measure directly. It’s a trend driven by dissatisfaction and overload, with employees increasingly wanting healthier work environments, more realistic expectations, and better work-life harmony.
For employers, it represents a challenge to ensure the organisation can meet its goals while keeping people happy and motivated in their work. As always, building solid employment relationships grounded in good faith and open communication is the best approach.
Earlier this year, a survey by recruitment company, Robert Walters, made the headlines for finding that 60% of New Zealand professionals had “rage applied” for new roles. Rage applying refers to sending off job applications in frustration at toxic work environments, poor work-life balance, or excessive workloads.
The other term that came across our radar was “quiet vacationing”, which describes employees taking time off without officially requesting or publicising it, either to avoid workplace scrutiny or to make the most of their flexible work arrangements.
Both of these developments present challenges for the modern employer, affecting the balance between productivity and autonomy, and an increasing unwillingness to put up with poor working conditions.
While this has been tempered to some extent by the growing rates of unemployment and job losses, it will be interesting to see how these trends evolve when the predicted economic rebound occurs (later in 2025?). Employers may have to make more effort to prioritise employee satisfaction.
The coalition government made many promises to reshape the employment landscape when it came into power, however, not much actual legislation was passed in 2024.
At the end of 2023, all employers were (re)given the ability to use 90-day trial periods for all new hires - providing more flexibility in assessing new employees - and the Worker Protection (Migrant and Other Employees) Act 2023 provided stronger protections against exploitation, particularly for migrant workers.
There has been a flurry of announcements late in the year, with various reforms to the Employment Relations Act that propose to:
Changes are also coming to the Accredited Employer Work Visa in 2025, including removing the median wage threshold, reducing experience requirements to 2 years, and introducing new seasonal visa pathways to help employers fill skill gaps.
The changes will be implemented in 4 stages over the course of the year, beginning in January.
Immigration NZ is also re-designing the Job Check step of the process, streamlining the Job Check for low-risk employers and improving processing times. This will be implemented from July 2025.
Elsewhere, the public consultation on the reform of the Holidays Act has led back to the drawing board, and we have yet to see what will become of proposals to make health and safety laws clearer.
All in all, 2025 could be a busy year for employment legislation.